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MTN to still sell stake in its Nigerian subsidiary

The telecommunication giant, MTN Group Ltd, has resolved to go ahead with its plans to reduce its stake in its Nigerian subsidiary. 

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MTN Nigeria, Commercial Paper, MTN to still sell stake in its Nigerian subsidiary

Telecommunication giant, MTN Group Ltd, has resolved to go ahead with plans to reduce its stake in its Nigerian subsidiary.

The South African based firm, whose Nigerian business unit is the largest telecommunication firm in Nigeria, will have to sell off those shares in smaller units than earlier anticipated due to the effect of the coronavirus pandemic on the global economy and the capital market.

Nigeria, which happens to be MTN’s biggest market, accounted for a third of overall 2019 revenue and almost 40% of earnings before interest, taxes, depreciation and amortization, is also the biggest provider of telecommunication services in the country, with about 69 million customers, according to the Nigerian Communications Commission (NCC).

Although the impact of the coronavirus disease and the crash in crude oil prices globally has been quite huge, especially on the financial and capital markets, officials of MTN Group, still recognize the importance of selling part of its 79% stake to local investors.

(READ MORE: Coronavirus: MTN Nigeria sensitises customers with network bar)

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In a monitored report, the Chief Financial Officer of the firm, Ralph Mupita, in an interview, said, ‘However, the rest of a three-to-five-year plan to dispose of 25 billion rands ($1.4 billion) of assets will probably take a back seat for nor’.

‘In Nigeria, we still want to do part of our retail offer, even if it’s a smaller part of the total planned sale’

‘We are applying our minds to doing this at the moment

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It can be recalled that MTN’s Nigerian subsidiary has been involved in a couple of disputes with the Federal Government over its operation in Nigeria. This started when in 2015, Nigeria slammed the Telecomm firm with a heavy fine of $5.2 billion after it was accused of a security breach and not disconnecting users with improper records.

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MTN,MTN to still sell stake in its Nigerian subsidiary

However, this fine was reduced to $3.9 billion after diplomatic negotiations between the South African Government and then MTN itself.

They also recently had a legal disagreement with the government over tax payments and irregular capital importation certificate.

(READ MORE:Ministers task DStv, MTN, others to offer free subscription, airtime, data to Nigerians)

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MTN plans to dispose of its 15% stake to indigenous investors, thereby reducing its shareholding to about 64%.

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The crash of crude oil prices has had a huge negative impact on the global economy including major oil producers like Nigeria. That development in addition to the outbreak of the coronavirus pandemic has adversely affected the capital market which has seen stocks crash globally. The MTN Nigeria’s share price crashed from N104.50 on March 18, 2020, to N90 on March 30, 2020.

The MTN Group’s share price which hit a 15 year low last week, has since rallied back for 6 straight days

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The CFO said, “We, of course, have no visibility on how all of this could play out, but the business currently has a resilient balance sheet and is highly cash generative, with most of our business coming from pre-paid contracts,

The telecoms firm expects an increase in data usage as its customers go into lockdown and restrictions due to the outbreak of the coronavirus.

Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

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Coronavirus

Combined Vaccine Manufacturing capacity to hit 6.8 billion doses in 2021

COVID-19 vaccine manufacturing capacity is expected to hit 6.8 billion doses in 2021.

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Covid-19: First world nations oppose waiving intellectual rights for vaccine development

Meristem Group disclosed that the combined effort in manufacturing COVID-19 vaccines for global use is expected to yield about 6.8 billion doses in 2021.

This was revealed in the Annual Outlook 2021 report presented by Meristem Group, titled Bracing for a different future.”

According to the report, the existing manufacturing capacity will only be sufficient enough to immunize about 44% of the global population, which would create obvious vaccination gap and make the pandemic last longer than necessary.

The report states,

  • The cold temperature requirements for vaccine storage pose major logistics concern particularly in Sub-Saharan Africa and other low-income countries. WHO estimates that about 50% of vaccines are wasted every year, largely due to a lack of temperature control.”

According to the report, the estimated 6.8billion doses are expected to be collaboratively manufactured as follows:  CanSino – 0.2billion, AstraZeneca – 3.0 billion, Gamaleya – 0.3billion, Moderna – 0.4billion, Pfizer-BioNtech – 1.3billion, SinoPharm – 1billion, and SinoVac – 0.6billion.

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What you should know

  • The global population as of 2020 is 7.8billion and 70% is required to achieve herd immunity (otherwise called herd protection)
  • Herd Immunity or herd protection is achieved when you have most of the population immunized against an infectious disease.
  • 2 doses of the vaccines are required for each person for immunity.
  • It is expected that between 11 and 15 billion doses would be required to achieve the desired herd immunity, globally.
  • From all indications, herd immunity may not be achieved until mid or late 2022, with the subsisting 100% vaccine production capacity utilization in 2021 – with neither production nor distribution losses.
  • To achieve regulatory approval, a vaccine must undergo a three-stage clinical development process after the exploratory and pre-clinical stages and the U.S Food and Drug Administration (FDA) sets a phase 3 efficacy benchmark of 50%.

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Coronavirus

Covid-19: Global deaths surpass 2 million

Global casualty record for the Covid-19 pandemic surpassed 2 million deaths on Friday.

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Nigeria blows past 40,000 COVID-19 cases

The Global casualty record for the Covid-19 pandemic surpassed 2 million deaths on Friday, with the United States accounting for 1 in every 5 deaths, as it has recorded over 386,000 casualties so far.

This was disclosed in a report by Reuters in its Covid-19 tally reported on Friday evening.

After the United States, Brazil, Mexico, India and the U.K contribute nearly 50% of the combined casualties.

The report also disclosed that an average of 11,900 casualties are recorded per day in year 2021, despite the fact that it took 9 months for the world to record 1 million casualties.

United Nations Secretary-General, Antonio Guterres, said the 2 million death count was “a heart-wrenching milestone.”

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  • “Behind this staggering number are names and faces: the smile now only a memory, the seat forever empty at the dinner table, the room that echoes with the silence of a loved one,” he added.

The WHO warned that 2021 could be tougher due to the nature of new variants which transmit the disease faster.

  • “We are going into a second year of this. It could even be tougher given the transmission dynamics and some of the issues that we are seeing,” WHO Chief, Mike Ryan, said.

Analysts expect the global death toll to surpass 3 million by April 2021.

What you should know 

  • Nairametrics reported that the total number of covid-19 cases in Nigeria had surpassed the 100,000 mark on Sunday 10th January 2021, according to the Nigeria Centre for Disease Control.
  • The African Union stated that it secured 270 million Covid-19 vaccine doses for the continent from drug manufacturers to supplement the COVAX programme, a step towards the commencement of the complex task of vaccinating over 1.2 billion people with limited financial resources.
  • The Nigeria Centre for Disease Control on Friday 15th January 2021, announced that 1,867 new cases of the covid-19 virus were recorded across 24 states in the country. This represents the highest number of cases recorded in a single day.

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Debt Securities

Interest rates will remain low until the end of H1 2021 – Meristem Securities

Meristem Securities has argued that interest rates will remain low until, at least, the end of H1 2021.

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Why Emefiele’s interest rate policy is ‘great’

Meristem Securities has asserted that interest rates will remain low until, at least, the end of H1 2021.

This statement was made at the recently held webinar on Global Economy and Outlook, which the company themed: Bracing for a Different Future.

Although the company acknowledged that there is mounting pressure for upward movement in yields from several stakeholders, it appears the company concurs nothing concrete is in sight.

This line of reasoning seems to have influenced their decision to advise investors to move away from Treasury instruments.

What they are saying

Meristem advises that:

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  • “Buy and hold strategy investors seeking to generate above average returns should move away from risk free Treasury instruments and focus on investment grade commercial papers and bonds which satisfy investment objectives.”
  • “Active traders with higher risk appetite are advised to focus on high-yield short duration instruments, which would be re-invested into a higher yield environment should rate reversals occur.”

The advice regarding shunning Treasury instruments appears to be in order, considering that treasury bill rate has been declining, with the latest figure — November 2020 — 0.03% as per the CBN monthly interest rate data.

Further checks from the Debt Management Office website, indicates that the latest figures for Eurobonds and Diaspora bond fall short of the fixed yield at issue for all the different categories of bonds in issue.

What you should know

Latest figures from the CBN’s monthly interest rate indicate that:

  • Treasury bill rate has been on a steady decline for six months, down to 0.03% since the last rise (2.47%) in May 2020.
  • Fixed deposit rates (one, three, six and twelve months) have also been declining – the latest figures for these indicate that in November 2020, one-month deposit rate was 1.92%, 2.9% for three months, 2.84% for six months, and 4.89% for 12 months.
  • Compared with the corresponding period in 2019, the figures indicate that these rates fell by 75%, 66%, 71% and 49% respectively.

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